The First Tier Tax Tribunal recently determined in the case of Vigne vs HMRC that the estate of the late Maureen Vigne was entitled to Inheritance Tax Business Property Relief that had been disputed by HMRC. The Tribunal found however that Agricultural Property Relief was not available in this case.

The crux of the case lay in whether 30 acres or thereabouts used for livery was business property or whether it constituted ‘making or holding investments’.

In evidence, it was argued that the deceased had run a business and that the property in question should be determined as “business property associated with and necessary for carrying on that business”.

Moreover the services provided were over and above those included at the lower scale of livery provision – grass livery, and DIY livery. These extra services included the provision of worming products for the horses and their administration; providing horses with hay feed during the winter with a hay crop grown on the land; removing horse manure from the fields; and a daily health check of the horses.

The Tribunal said: “this was a genuine livery business which was developed so as to be … offering significantly more than the right to occupy a particular parcel of land,” and that the provision of these services was: “incompatible with the business of holding investments.”

Susie Swift, partner at Saffery Champness and a member of the firm’s Landed Estates and Rural Business Group, based in the firm’s Inverness office, said: “The outcome was that the business, including the land, qualified for Business Property Relief despite the fact that HMRC attempted to show that the purpose of holding the land as an investment took precedence over what was a business of keeping horses at livery.

“In many senses this is a victory for common sense in so far as an activity that looked and felt like a business is granted this relief. The circumstances however are quite particular to this case so although this victory for the taxpayer is helpful, care needs to be taken when trying to apply the principles of this case to other circumstances.”

The appeal by the Vigne estate however that Agricultural Property Relief should be available failed because, although a hay crop had on occasion been taken from part of the land, this had not happened in the two years prior to death and also because under the law equine activities are not normally characterised as agricultural.

The case covers some similar considerations regarding the level of services required to be provided to ensure that there is a sufficient ‘business’ to qualify for Business Property Relief to the recent Ross case which concerned a Furnished Holiday Letting business. In that particular case the Tribunal found in favour of HMRC.

Those with livery businesses would do well to discuss this case in detail with their advisors as it offers particular detail as to when Business Property Relief from Inheritance Tax should be available for an equine holding.